tv Fast Money Halftime Report CNBC August 7, 2012 12:00pm-1:00pm EDT
that does it for us. "fast money halftime report" begins right now. >> thank you carl. welcome to the "halftime report." four hours to go before the close. with stocks at the highs of the day the dow is less than 100 points away from a 4 1/2 year closing high. you can see the major averages right now.
the nasdaq there it sits. back above 3,000. the s&p back above 1400. the s&p's highest level since early may. there is the dow as you saw there. here's what we're following. sell the dinosaurs. that's what ubs says about some big tech names. we'll tell you exactly who is on that list. and man versus machine. the high frequency trader fights back and takes on our team as we look out for you the investor. we're trading all of the big movers guy with guy adami, mike murphy, steve weiss and brian kelly. the markets, the mystery behind the melt-up. what's behind it? stocks are surging despite the fact that europe remains unresolved. the u.s. economy is sluggish. earnings expectations are coming down. stevenwise what's behind it and how long can it last? >> the latest piece of the puzzle came out today and that's when merkel's deputy pr person said maybe sovereign bond buying is not a big deal, essentially going along withdrawing i go.
so right now my view we've got a free pass, i've added exposure to market, added last week, this week, now we're waiting for the plan from draghi and to see if bern if i comes out with qe 3. that gives you the okay to buy stocks at least through the next couple of weeks. >> let's ask the triathlete. does this market have legs? >> judge, we were hearing last week on the horrible day in the market, a day that sort of faulked down any potential actions, it was a draghi day and all headlines although up and down it's been more sitive than negative in terms of price action. as long as we stayed about 13034 it's fine. i think it lasts for awhile longer. at least until we get to 14,022 level, the may high we saw in the s&p. at that point it becomes you have to prove it for the bulls. they proved it to this point. the last inning is the most
difficult. there's still another 20 points or so on the upside in the s&p i think you really have to start to think about what do i own and do i need to pare down risk? >> energy, industrials, materials, is this about the fact that the market finally believes that europe is going to do something and do something big? >> yeah, i think that's what we had. we had a rethink on draghi and i certainly am probably one of those people that rethought on draghi. guy mentioned last week, when you look at what happened last week the markets sold off. then everybody said wait a second, draghi's going to be out there buying bonds. what europe needs is some kind of debt monetization, a weaker currency and some plan for growth. we have the bond buying. we need them to put up and stop talking and do it. as stephen weiss said you have this period of time where things are relatively bullish.
then you have china and then the u.s. you have this global stimulus trade going on as long as people keep buying into it market goes higher. >> murph you have a global floor under the market right now don't you? >> you do. i'm going to agree with everybody on the desk right now, scott. i think the market has more upside here. the 1422, 1425 level is key. there was a note this morning i thought was interesting. there's been over $3 billion worth of call buying on s&p calls that expire in august. the dealers are going to have to go out and buy the market. as the market moves higher for every 1% move up you're going to see $3 billion potential of buying coming into the market. which could push a minor rally even that much higher. so i think we're going higher from here. >> you think we've got 20 or so more points s&p to go here. what would you be in to to ride that? >> you see trading caterpillar. i think the things that have been working will continue to work.
i know it sounds trite and i don't mean it to. some of these dollar stores will continue to work. some of the energy names, we talk about some of the refiners, bolero having a nice day. that's interesting. but i'll caution although i'm bullish in terms of price action another 20 points or so i think we're at a point now where the euphoria is starting to kick in and as negative as people were a week or two ago, that's how positive they seem to be now. so enjoy the rest of the ride. i don't think it's going to be that long-lived in terms of duration. and i'm giving you my points in terms of s&p. so 20, 25 points from now i think you have to rethink everything if you get there. >> steve weiss? >> i agree with everything. i went where i hated to go. i actually bought steel because i thought it was spring loaded and so heavily shorted. i added to cat actually. i even bought the most levered coal company to steel. so the ones i hated the most is where i went. while i do think there's
euphoria i still from the guy's i talked to the managers i talked to, they still haven't bought in to the markets. they're still worried and i think with good reason. >> a lot of optimism about central banks around the world could do. boston fed president thinks more action is needed right now. he spoke exclusively to our senior economics reporter steve liesman who joins us live from boston. steve, rosengren may not be a voting member but his words carry weight. >> they matter, scott. good afternoon i think markets are paying attention. not just because he advocated a policy but because he started talking specifically about how he might implement it and i want to play you some of the tape from the interview we did this morning. where he lays out the detail of what he's looking for and what kind of quantitative easing that he would favor. >> i think it needs to be substantial enough that it offsets some of the shocks we're getting and some of the concerns
that people have about how the world economy has been. we're in a global slowdown. that would argue for a quantitative easing program and one of suggest magnitude tt it has an impact. >> what would be that magnitude? >> exact magnitude, roughly the magnitude that we saw for the first two quantitative easing programs i think would be appropriate. >> combined or in a single -- >> no. >> one program? >> what i would argue for, actually, is to have it open ended. that we focus on economic outcomes. it would be a promise, so i would focus on the mortgage backed securities, and it would be a monthly rate that you could alter if you wanted to. but an expectation that you would have it of a substantial magnitude. so rather than setting a calendar date, rather than setting a magnitude. you'd say we're going to do this monthly growth rate until we see an improvement in the economy. >> guys, rosengreen does not see additional growth or a speedup in growth in the second half of the year.
and his bottom line is we don't have two quarters to wait. people who are coming out of school he has two college kids don't have time to wait and people who are on the edge of retirement don't have time to wait. that's why he thinks the federal reserve needs to act now. >> steve do you think bernanke expected those comments today from rosengren and how much do you think it shapes his own feeling on where we sit right now? >> so scott it's a good question. i'm not sure i can answer it. you could posit that a guy is talking because he does not have the board with him. if he did have the board with him he would let the chairman lead the way. so i'm not sure that the fed is on the verge of open-ended qe. i just need to listen and hear bernanke talk. bernanke needs to suggest that he is behind these kinds of comments. i have a feeling that eric rosengren needs a little sort of momentum behind his point of view. i know he's got evans on his side so that's evans and rosengren, probably janet yellen, but where the rest of the board, lockhart if he's in favor of open-ended qe i think there's quite a debate going on
behind the board an many others to hear from and we're going to hear from them at jackson hole. >> steve stick with us. >> steve, i'm curious, did he talk about the fiscal cliff at all? because i know chairman bernanke has said no matter how much money we put in nobody's going to be able to alleviate the fiscal cliff? >> so rosengren takes a more affirmative responsibility for the economy no matter what congress says. he says let's look at the reality. this is a segment we'll play for you, hasn't cared yet, in the 1:00 hour, he says we just can't realistically expect too much help from europe and we can't expect congress in this period of time, between now and the end of the year, to fix the miss cal cliff problem. it is our responsibility to step forward and take action to help employment and to help the overall economy. so he does talk about it. but he says, look, it's our job to handle this. >> sounds like a lot of ink's going to be used.
i mean that to me sounds like a guy who is ready to really print some money. >> and he wants to buy mortgages. he wants to bring the mortgage rate down. especially. but he talks about the overall effect of qe on the economy, including on the stock market. including the wealth effect and including on the housing market. including rates, and other, other, other bond. >> it's good to talk to you. talk again soon. >> see you guys tomorrow. >> steve liesman up in boston. tech stocks meantime helping lead the market higher today. market alert desk with brian shactman for more details there. >> goldman sachs upgrading the semiconductor sector to attractive from neutral and the basic premise is supply and inventories are at healthy levels. the weakness in the stocks are priced in. valuations now are reasonable. these are the four top picks. we have lsi and freescale upgraded to buy and alter ra and nxpi are their top picks. but they don't like everyone in this space. take a look at the names they are not as high on. tried and true ones being intel,
and you have amd as well. and atml. three names up today but not at the top of their list. >> steve weiss i don't see any mention of qualcomm there. >> they'd like to actually, different analyst policy. qualcomm's been doing exceptionally well in the apple updraft. you take a look at the others and the announcements have come out and everybody's cut back in capacity. these are ultimately commodity companies. when capacity gets cut back and inventories are low they go higher. >> lsi is actually pretty interesting. that's the two names that sort of stick out to me, lsi and the goldman upgrade. they had a pretty good quarter, announced a $500 million stock buyback the other day. look at what texas instruments has done since the midquarter upgrade. stock down to $26 offer the back of it. it's been flying ever since. >> mike murphy, goldman sachs,
semis are attractive there. are they attractive to you? >> they are, scott. nxp is really interesting. with apple hitting new highs i think nxp trading as goldman puts it 33% below the peers. i think there's a lot of upside. >> lots more halftime report is on the way. the financial rules of engagement behind amazon's first free to play game. a look at whether amazon is emerging as a major threat to the social gaming space. plus, ibm, apple and hp, they're the classic tech names found in most portfolios. is it time to reconsider your exposure? some answers when we return.
how do you know which ones to follow? the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea. this is new york state. we built the first railway, the first trade route to the west, the greatest empires. then, some said, we lost our edge. well today, there's a new new york state. one that's working to attract businesses and create jobs. a place where innovation meets determination... and businesses lead the world. the new new york works for business. find out how it can work for yours at thenewny.com.
welcome back. amazon, the publishing industry with its kindle and slammed the big box stores with online retail is gaming the next industry that amazon will decimate? the company announcing a new social gaming effort called am dan game studios as well as its first game for facebook called living classics. make any sense to you? >> it makes entirely good sense
to me. and here's the reason. first of all you don't want to compete against a company that's got a different business model and deep pockets and really doesn't care about near-term earnings. they could offer for free or low margins what you're charging a lot of money for. we see what happened to zynga. game stop, i'm surprised the stock is where it is. this is another way for them to draw traffic to their site at a relatively low cost. >> unless you believe this like what the heck is amazon doing getting into the social game business. it's not their wheelhouse. >> it brings traffic onto the site. you offer them something free, to consumer, consumer comes on, plays the game, they don't have to pay for it, it's a good game. remember games are fads. they go in and out as we saw with the animal games. so i think it's phenomenally good idea. >> mike murphy, you agree with this? is amazon veering off course? >> i don't think they're veering off course at all, scott. i think any time amazon has slightly veered off course,
they've taken over whatever course they've gone down to. i think right now they're going in to the social gaming, if you wanted to play the bullish side for zynga, you would say amazon coming in there gives their business model some credibility. like steve said, amazon will come in and offer games for free. you can't compete with that. >> we already know, by bezo's latest move he doesn't care. >> i think it's a cheap bet to be honest with you. i'm sort of in the camp with steven weiss. you look at amazon the stock. 100 times forward earnings how does that make sense? their growth rate is astronomical. you have to ask yourself how long that can continue. and it's continued for quite some time. but you look at last quarter which might have disappointed people. you look at the operating margins, and their operating margins were much better than expected. every little uptick in operating
margins for these guys is tremendous for them in terms of the stock. so although it might be rich in terms of valuation, i get it, the stock still seems to be pretty interesting. >> hp and dell shares higher today despite a top analyst saying now is the time to sell out. steve from ubs made that call. welcome back to the show. good to have you back on halftime. >> thank you very much. >> why don't you like hp? >> we don't like hp because they have an identity crisis. they're try to trying to be a consumer and a corporate company. meg whitman decided not to spin off pcs which i think is fine. but longer-term they have to look at what are we? and ultimately i think they may take the pc and printer big and spin it off. because those assets are probably declining value. print ert, great business, great tech franchise. i think it's peaked. printers will come under increasing pressure from tablets and asian competitors. stock obviously way down. we think a couple more points to the downside. >> how long do you think it tabs meg whitman to realize what you
hope she does finally do? >> i don't think it's the first priority. she's got a lot of other things to fix. i think she's doing a good job in terms of centralizing strategy and marketing. i think it's going to take some time and our breakup value on hp is near 30 bucks a share. so what they don't execute well i think there's going to be increasing investor pressure to think about splitting the company up. >> steve wise. >> so you have right now a downside target of just a few bucks and you have an upside to double. why would you have a sell put on it when it's the risk, and most attractive out of any of your group particularly if you handicap the outcome? >> we're looking at the fundamentals. and at this point not factoring in the likelihood of a breakup which i think is years away if it occurs. but in the near term what i think i can see is a pc business that lost two points of market share during the quarter. lenovo is breathing down their neck. printer business is probably going to be in decline here with peaking margins.
and their own admission the services business is going to decline. they just paid a ton of money for autonomy. while the free cash flow is not bad it's not going to go to shareholders, it's going to go to repaying debt. >> your deck on dell is not much more positive though. i'm perplexed as to why you think long-term this companies prospects look pretty good the a time when pc sales are slowing down? they're facing huge competition from tablets. >> they have a lot of the same problems being overweighted in pcs and questionable twiez computing companies. dell is trying to go from being known as a direct seller pc to being a enterprise company. they don't have much history there. what makes me somewhat optimistic is they made a number of interesting acquisitions in the enterprise space. michael dell whose name is on the door is leading the charge. and they can come in and say we're about simplifying i.t. we don't have this legacy of main frames and unix boxes like ibm and hp. we'll give you the newest, greatest thing.
it's going to be cheaper and more efficient. it's going to take a couple years to see if that plays out. in the meantime the pc business is probably going to be under pressure. over three to five years i think it could be pretty interesting. >> steve, nice to talk to you. >> thank you very much. brian kelly trade these names. >> you know what? i actually think if you want a cheap stock you might want to look at buying these. while i agree with steve's premise that the printer and the pc business is declining, that's not new information. and these are cyclical businesses, and commodity products for all intents and purposes. and they're almost at a price now where they're so cheap to have i could just look at myself where i have a couple tablets in my household, a lab top but i'm getting to get a desk top so when i get home i have that availability and i don't have to lug stuff around. at the valuations that they e, particularly hp with meg whitman in there if you believe she's going to turn around the company not a bad place to be in. >> mike murphy, i think the point he makes is it's attractive looking, it's cheap,
likely to get cheaper. >> i agree with that. i was just in the apple store last night and when you get inside the apple ecosystem where all your pictures are on there, your music is on there, movies, i think going forward people are going to go out and not question whether they're going to buy a dell desk top or a hewlett-packard desk top. they're going to the apple desk top. i would rather own an apple than a hewlett or a dell. >> market movers that might not yet be on your radar. church and dwight dropping 7%. >> revenues were light. story we've heard before. the sell-off in the stock is not unprecedented. go back to last july we saw similar move in terms of percentage. i think it's an opportunity. there are no one-day events. i would look to buy it. today is tuesday? look for to buy it on thursday. >> we'll hold you to that. fossil popping 32%. >> great earnings here. what fossil has suffered from they do a lot of business in europe so it became a proxy for the short europe trade. much better earnings than people
expected. high short interest here. i'll trade this like guy trades it. let it stew for two or three days. >> murph coach popping 4%. >> coach was in the mid 60s. down to $50 a share. stock's come up $50 to where it is today up in the 57 range. a $71 price target. i would wait for this to settle in a little bit. >> cvs care martwise dropping. >> they did pick up some customers from walgreens. walgreens got their feet back under them with them. >> a pop for bronze. study has surfaced showing third place olympians are often happier than those who win silver. researchers found bronze medalists to be more pleased than second place contestants based on podium smiles, and interviews. silver medalists may feel like they've fallen short but those with bronze are happy to have won anything at all. of course the happiest athlete on the podium is still the one wearing the gold medal.
>> what do you think about that judge? you buy in that? >> yeah. i think if you win the silver -- >> happy to be there. >> happy to have gotten something. >> honorable mention. >> and steve and mike. >> stocks still at session highs. crude hovering above 93 bucks. 12 or 13,279 is where the dow has to be to close at a new 4 1/2 year high. so we're about 79 points or so away from that. coming up, we'll have the latest on the chevron refinery fire out in san francisco, and how it could affect gasoline prices. looking for a better place to put your cash? here's one you may not have thought of -- fidelity. now you don't have to go to a bank to get the things you want from a bank, like no-fee atms, all over the world. free checkwriting and mobile deposits. now depositing a check is as easy as taking a picture. free online bill payments. a highly acclaimed credit card
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chesapeake energy is surging today after the company increased its production forecast. also ramped up its asset sale guidance. the stock has been recovering along with natural gas this summer. but questions about aubrey mcclendon rerain. what's the trade here? steve weiss? you've exchanged some e-mails with aubrey mcclendon? >> today is basically congratulations for the quarter, and he said thanks of course and the stock is up 10% and he feels as he said in the conference call, they're hitting their
operational stride. either way he had one of the warmest winters in the last 100 years. that's great for nat gas pricing. so if the stock keeps moving up 10% and periodic installments he will stay there. he's still a great -- the issue with the shorts is chesapeake won't be able to sell enough assets. so that's what they're betting on right now it doesn't look like they're right at least today. >> murphy the stock's been moving up. is mcclendon's reputation getting a boost as well? >> i think it is. i think the longer time passes the further that gets put behind the company and mcclendon and like steve said, if the stock is going to continue to be strong and chesapeake is up in the high 20s, we're not going to be talking about mcclendon at all. i think there is upside in chesapeake for two reasons. one, i think natural gas can get above $3 and stay there. but number two, remember, the people that are in there, the icahns and the largest shareholders, the southeastern in there own i ton of stock, so i think you have a floor under
this stock and it can trade a lot higher. >> guy, you agree? >> i'm not as confident. i think it's totally a binary thing. meaning zero or 30, and i think it's a coin flip. if you want to be in the space, not that there's that similar but phillips 66 we talked about. last week i think we said that north of 40 here it is now and apache apa has been in a very defining trading range since may 90 on the upper end now. if you're looking for more safety in the space those two names. but if you want to take a flyer you can take a look. >> what would be your big concern with chesapeake? >> look i think there was a grateful dead album skeletons in the closet or from the closet and i think there's still a tremendous amount of skeletons in the closet. >> -- >> -- i mean how can you not just sort of -- you have to admit that that potential is out there. >> it's zero because the stock's been up. >> those issues have not gone
away. they're still there. time is not going to cure those. the stock price may to a certain extent. what you're betting on here purely is the most leveraged play to nat gas pricing. that's it. and if nat gas pricing hedge out a good part of their production at 322 he's looking for another quarter or another half a year. off to the races. >> why not just buy nat gas? don't worry about the headline risk buy unj. >> you're absolutely right. >> bk whether it's a twitter roomer or today's fire at a chevron refinery, oil and gasoline seem poised to rocket higher. how should you play this market? let's make a pit stop new with founder and ceo of killer capital. jeff where's oil going from here? what's your target based on not only what's going on with the refinery issue but some of the geopolitical concerns always in overhang? >> well like you said, judge, there's a lot of undercurrents here in that 10% capacity refinely reduction off of that
fire out of richmond california is a concern on the market. right now initially seeing some resistance on the chart in wgi at $96. so right here we're seeing uso that's the etf i like to use to correlate that play just came short at $35, i was talking to doctor j. this morning and as i do see some volatility here and possibly pullback as we wait for the geopolitical tension to unfold as well as mario draghi articulate how he is planning to rescue europe and if we could see a slight pullback here therefore selling allows an investor to collect a premium here but i do see this crude oil staying above $90 unfortunately. >> what about $100? do we get there and when? >> we could get there in two shakes of a lamb's tail, judge. we could see these prices moving if this geopolitical tension heats up. and also the pain at the pump. you're going to see a lot of conversations here because in the event that richmond fair on the west coast if 10% of the u.s. capacity is taken off the market, you can see a 10% move
essentially on the west coast, in prices. right now the national average is $3.65. that puts us above $4 a gallon. and that will put everyone in some serious pain at the pump. >> if you're in the oil pit are you watching the dollar as much as anything? the dollar's been weaker lately on more optimism coming out of the eurozone. >> yes, exactly. watching the dollar. but we're also watching the s&p. right now above 1400. kind of confirming that mar wroe draghi is going to bring it. we're waiting for that message a long time between now and september 6th so we could see some volatility. we really need him to come like he did with the ltro last december because we need confirmation on this long in the tooth some people reality in the equities. >> you're speaking jeff we're looking at video that was shot earlier from this refinery fire out in california for chevron. steve weiss do you agree with where kylburg thinks oil's
going? are you watching the dollar? >> for me it's 80% about the dollars, 20% about the other stuff. it's a dollar denominative commodity and always had a high correlation. that's what i'm watching. >> good to talk to you as always. >> all right. >> more halftime report is up after the break. renee haugeraud is targeting what's in your grocery start. first rage against the machines. how the head of a high frequency trading firm is dpieting back against the critics when we return. okay, here's the plan. you have a plan? first we're gonna check our bags for free, thanks to our explorer card. then, the united club. my mother was so wrong about you. next, we get priority boarding on our flight i booked with miles. all because of the card. and me. okay, what's the plan?
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standard chartered's london shares the most in some 24 years after being accused of dealing with iranian banks proving their may be no end to the headline risk in the banking sector. but is there? banks are roaring higher with jpmorgan up 3% alone. sure banks are doing well today. what about this weiss with standard chartered? just another reason for people to think i cannot trust what's going on at the banks. whether it's this, or barclays or the london whale and the list
is getting ever more long. >> you know, there's skeletons in every closet. you just heard guy talking about skeletons. >> how did they all end up in the bank's closet? >> it's not only in the bank's. it's everywhere. just -- if you want to launder money and you're the iranians you're going to a bank that's not in the u.s. stay away from those. jpmorgan may have had their issue but it wasn't one of integrity. >> you thought this one was quality right? they made it through the financial crisis better than most people did. >> stay on the home turf. stay on the home turn. i mention sheepishly whatever that word is that i bought jpmorgan. i like it. i buy some more in the dip. i think that the banks will do well particularly in the bond backup which they may very well do. >> murphy, outrage all over this story obviously. but if you're an investor in a bank does it shape the way you would deal or bet on a bank? that's essentially what you're
doing. you're taking a risk when you put money in the stock of a bank. and lately you've had a lot of reasons to be worried. >> right. and i think the banks are under a lot of scrutiny right now scott and rightfully so. but you look at this standard chartered issue, there are a lot of articles from the "financial times" this morning and a lot of the people over there said, u.s. stay out of our business. if queer going to deal with iran let us deal with iran. i don't know that i agree or disagree with that. but this one instance just like the london whale uninstance at jpmorgan if you take a step back, if you can go back to that jpmorgan london whale news what a great buying opportunity it was in the stock when it came down into the low 30s trading up over 37 today. if you want to be in a bank knowing what the rules and regulations are that these banks have to adhere to, you know the pluses and minuses of them but i think there's a lot of upside in a lot of these u.s. banking names. >> brian kelly do you agree? >> yeah, exactly. i think it's a buying opportunity for some of these
banks. take a look at a wells fargo. you don't have to worry about the headline international risk. you get a good play on the u.s. housing market. a nice dividend. that's the way i would play this here. >> the debate over trading at the speed of light intensifying since the knight capital debacle. yesterday on halftime we talked about the issue with one of the most respected an trusted names in the business vanguard founder jack bogle who aligned himself against high speed trading. >> created here in today's environment i think can fairly be described as a frankenstein monster of trading that just has no particular reason for existing. >> all right now the head of a high speed trading firm fights back. the ceo of trade works, welcome to the show. good to have you on halftime. >> thanks for having me. >> frankenstein are the words of jock bogle. obviously well respected voice in the markets. investors listen to what he has to say. what do you have to say? >> well, mr. bogle and i know each other and he's a smart and
successful guy. but i think he misunderstands the business that knight was engaged in. knight's business was not pointless, nor was it speculative. it had a very concrete purpose and that was to provide liquidity to the markets. a very, very significant percentage of all the orders that are submitted by individual investors get executed by knight or got executed by knight. and that business is not speculative. they're not trying to make bets on market direction. >> isn't the premise here though that technology is out of whack? when a firm can nearly go out of business because of a software glitch, have some tweets from some viewers and people who follow me on twitter who sent to me i want to read them to you. whoa i don't have confidence in the market. another person, quote, the controls on computer trading are ones like controls at chernobyl they work until they blow up. cyber attack next on the list. another quote, the stock market can take away in one minute what you worked your entire career to build. >> yeah, but i don't see why
that's anybody's business. knight had the glitch. and they suffered for it. other investors did not suffer for it. there was no systemic issue introduced into the market as a result of this. markets are supposed to be the ultimate distillation of capitalism, and capitalism is partly about survival of the fittest. and so they had a glitch, they sufferedor it. now the point is that the vast majority of systems eventually have glitches. whether they're trading systems or other kinds of systems. t that's why you have risk controls. and i think that the problem here is that knight's risk controls failed, and they suffered for it. >> i think the issue here is that, to the regulatory authorities, they have the same ammunition to go and understand what hfts are and i say no. so until they can, i think they have to dial it back. the knight issue aside i agree. the knight issue is really an software issue. they are destroying confidence.
i think i'm a pretty sophisticated investor and i don't have the confidence in that technology. >> isn't that at the end of the day the bottom line, i'm surrounded by traders here at the table, who make their livings as human beings in the market and they're going up against robots have the advantage, and then you have to worry about too much technology at work running amok and causing issues. yes the knight capital thing was specific to knight but it did a number to investor confidence following facebook, following the flash crash, following the fast ipo and everything else. i think that's the point. >> i'd like to address both of your points. the first point is about investor confidence and i do think that the crux of the problem in the market with investor confidence is that people have this conviction that the regulators do not have the same grasp of the market or the same ability to look at the market that high frequency traders do or other sophisticated market participants and that has to change.
and to their credit i think the regulators acknowledge that that has to change and they've started to take some very positive steps in that direction. so, that's one issue. the other issue is that this notion that computers are taking over the financial markets is just crazy. it's a rather vacuous assertion. the only time individual investors would, would cross against or come into contact with automated traders is when automated traders are on the other side of the trade providing them with liquidity. it's when humans, the place of jack bogle and i agree is that human beings should not be involved in short term trading. humeage beings should be involved in long-term investing. and that's, that's a realm where computerized decision making has made no inroads whatsoever. >> i don't mean to interrupt you -- >> of human beings and it always has been in my opinion it always will be. >> to say that human beings
shouldn't be involved in short-term trading, i mean that's, that's, a ridiculous statement to make. people have been trading for years, some very successfully so. the fact that you're going to say that machines should take over the short-term trading. there's no place in the market -- you can't say that humans can't be trading short-term in the market. that's just not -- that's just all -- i can't even fathom that. >> particularly when you -- >> -- humans whether they want to engage in short-term trading or not. but the point is that the people who have traditionally engaged in short-term trading have been put out of business by computerized traders because algorithms are better at trading for the short-term than humans are. they're much better at dissimulating tons of information very quickly, reacting to it quickly and those are the skills that are necessary to trade on a short-term basis. for a long-term investing, computers really have no advantage whatsoever. they have no ability to understand secular trends or predict the future. and that has been and always will be the domain of long-term
investors. like i said that's, that's mr. bogle's point of view. yeah, i think you invited me on to respond to him and i completely agree with him that human beings should not be wasting their time with speculative short-term activities. they should be engaged in long-term investing. >> you're our guest we'll give you the last word. let's also note that you have been working with the s.e.c. the best that i can tell to sort of educate them on high frequency trading and how it works. is that correct? >> yes. it's not just education. we were recently awarded a government contract to provide the same analytical capabilities that our firm uses to built strategies. >> okay. >> those capabilities are now in the hands of the regulators, and our expectation is that that's going to dramatically improve the commissions ability to understand the effect of algorithmic trading on the markets. >> we'll talk to you again soon. >> as we head to break we're keeping an eye on the dow. highs here up next we'll get an analyst's take on amazon's
welcome to the show. >> thank you for having me? >> is this good for amazon to be doing this? the traders seem to think so. >> good for amazon. amazon has taken the razor blade and essentially given the hardware away at zero margin for them and limited pricing and make the money on the content side, whether books or music, gaming, one of the most popular activities on mobile devices today. >> not out of the comfort zone for them? is that a possible risk? >> definitely not something they've done before. we have to watch it closely. i think they will take it slowly at first. with zynga shares coming down, they will look to whether to get more aggressive into the gaming space. >> with pricing earnings coming out, 60% of revenues out of europe, how worried should i be seeing this stock at $81.
>> we still like it. it's growing at 30% plus today. europe data has been remarkly decent for the travel space. expedia put up 20% growth. no change versus k 1. the macro data we've seen looks okay. we're still expecting roughly 15% for europe in the quarter. >> thanks so much for talking with me. what's the deal, guys? >> i wouldn't be buying. i know it's up today. hopefully what you saw last quarter, you had a two-day sell-off and then you had an opportunity. if it rallies post earnings, i think you missed the trade. not unlike other stocks we've seen. hope they miss and settle down to the 650 range. close your eyes and take a shot. >> murray, do you take a shot here? >> i don't. buying this number, it's priced to perfection. moving up to expedia's good
earnings announcement. this stock has to beat on eps and revenue soundly. i'm with guy, i would take a look but not jump on this number. find out why it's outperforming stocks. let's find out why. welcome to the show. nice to have you on set. why the play for commeodities now? >> we think we're in a massive regime change and seen it for the last decades. we think we're hitting a wall everything from fertilizer to genetic energying, we have shortages, drought, land decreasing around the world and decreasing demand. we think the egg sector has legged and food could be the new distressed asset. >> we also have a global slowdown, right? that factors into commodities.
>> it does and we're focusing more on supply and demand. the first eight decades, really demand was the price determinant and after 2008, we went back to old fundamentals of supply. we were hit with the drought and corn and actually zero carryout on our models this year, first time ever since the 1988 drought and even worse than that. >> your friend, steve weiss and i talking about the area oil is going to go. we both think dollar weakness is the mistaken driver there. is that what you see as the main driver in the commodity trade going forward? >> yes. but it exacerbates it. because of the supply shock, we think it will decouple and go up when it goes up or down. commodities will just go up more when the dollar goes down. >> i wrote a chapter on rennren. we have soybeans behind it and
is it exacerbated by weather and would you sell and look back to get in when there's some rain or how would you play those? >> that's a good question. it's tough, it's binary. the corn crop we think is pretty well gone. we can't improve it. beans still have a little room to move. we have taken profit. full disclosure with options. if we continue with ethan margins being positive, like they just turned positive again and we have no rfs mandate, regulations that change, we think we could be headed for $10 corn. >> you think it's hitting 18 when? >> probably later this year. >> thank you very much.
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